Ukraine Shale Gas: Shell Moves Forward While Chevron Stalled
Royal Dutch Shell's quest to develop Ukraine's shale gas resources took a major step forward last week, with the approval of a production sharing agreement on the Yuzivska deposit by both the Donetsk and Kharkiv regional councils.
The approvals will allow for the production sharing agreement to be signed by the national government.
Speaking to the media on Friday, Ukranian Prime Minister Mykola Azarov commented: "The Kharkiv regional council and the Donetsk council yesterday and the day before took these decisions. On Jan. 24, the production-sharing agreement will definitively be signed."
Originally expected to be signed in September 2012 the agreement which outlines ecology, social and other requirements of Shell, faced opposition from local councils based on environmental concerns.
With estimated reserves equal to two trillion cubic meters, Yuzivska can produce "several billion cubic meters" of gas in five to six years according to Oleh Proskuriakov, Ukraine's Environment and Natural Resources. Proskuriakov said output would increase to 10 Bcm in 10 years and to 20 Bcm in 15 years.
A tender process saw Shell winning the right to explore shale gas in Yuzivske gas field in May 2012. Chevron Corp obtained the right to develop gas deposits at the Olesska gas field in the Lviv and Ivano-Frankivsk regions
However, the process at Olesska which may contain upwards of 1.5 trillion cubic meters of gas, has run into environmental and political opposition led by the far-right nationalist Svoboda party.
Iryna Sekh, a Svoboda deputy commented that authorities in Donetsk and Kharkiv had voted blindly in support of the Yuzivska agreement without being aware of its details and the possible ecological repercussions.
"In the west of the country, things are going slowly because of political considerations, said Prime Minister Azarov. "The majority on the Lviv regional council is made up of well-known political forces."
Related Reading: Anti-shale gas campaign gets new momentum with Svobod